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The broad market rallied Wednesday on hopes that the fiscal cliff can be avoided. But the Nasdaq fell due to weakness in Apple (NASDAQ:AAPL), which was down 6.4%, its largest one-day drop in four years. (For more on AAPL, see the Trade of the Day.)

At the close, the Dow Jones Industrial Average was up 83 points to 13,034, the S&P 500 gained 2 points at 1,409, and the Nasdaq fell 23 points to 2,974. The NYSE traded 759 million shares and the Nasdaq crossed 418 million. There were slightly more advancers than decliners on the Big Board, but on the Nasdaq, decliners were ahead by 1.3-to-1.

The good news is that the Dow’s rally popped it above its 200-day moving average at 12,997. The bad news is that it failed to punch through the resistance line at 13,040. So the senior index is trading in a very narrow zone bordered by those two lines.

Even if it were to move ahead, it has the 50-day moving average at 13,163 to contend with, and that should be a difficult barrier to overcome, especially if the MACD indicator stays “overbought.”

The Nasdaq led the market to a new high for the year in September, but since then, it has led the market lower. Wednesday’s fall from its 200-day moving average is a weak technical sign. And the overbought MACD is telling us that more sellers are waiting in the wings. Its next support is at the 20-day moving average at 2,937.

Conclusion: Wednesday’s Dow rally, based on the hope that negotiations will avoid the fiscal cliff, did not change the market’s technical picture. The intermediate term is being tested, and the success of its holding depends upon Washington’s ability to avoid a recession.